HCA: “Hoping to Cash in Again?”

Apparently part-time Palm Beacher Henry Kravis is bullish on IPOs, not only for his own private equity firm, but for the nation’s largest hospital chain.

According to the Associated Press:
“…Private equity firm KKR & Co. LP, the parent of private equity firm Kohlberg Kravis Roberts, launches Thursday on the New York Stock Exchange.
It plans to register 204.9 million common units worth about $1.93 billion and said it may later raise about $500 million in a share offering.”

Meanwhile, even as Kravis’ equity firm heads to Wall Street, one of its biggest holdings, hospital giant HCA (via its interest in Hercules Holding), is heading to Wall Street, too. This could mean a big pay day for Kravis and many of his Palm Beach clients.

JFK Medical Center in Atlantis, FL / PB Post

KKR PEI Investments and private equity investments (via two KKR investment funds) together put KKR in control of more than 8 percent of HCA, ccording to KKR’s media fact sheet on HCA. (That’s as of June 30, 2008)

A report on CNBC today says HCA is expecting its initial public offering to bring in as much as $4.5 billion. Over the next several weeks it will be making presentations to potential investors. Language in its SEC filings suggest that certain employees will be granted performance incentive shares. It doesn’t indicate which employees, or how much.

What will all this mean for HCA’s hospitals? Since KKR and the other equity investors bought HCA in 2006, the top brass have been mostly occupied with the ledger and the legal issues.

The hospital company had spent eight years under the watchful eye of a Corporate Integrity Agreement with the Office of Inspector General at the Secretary of the Department of Health and Human Services.
(This stemming from the Columbia/HCA Medicare fraud case.)

The vote to proceed with the IPO came less than a month after the Corporate Integrity Agreement signed off on HCA’s final report, closing the chapter on the fraud repayment.

According to Modern Healthcare, if the SEC approves HCA’s plans to go back to the stock market, it will represent the third time HCA has gone for an IPO since it was formed in 1968.